Unfair Contracts Bill

[Amethyst]

Unfair Contracts Bill - WhatDoTheyKnow

Tried a different method which publicises the info more as well

Why did I want this info ?
Law commission unfair contracts small business extract - Legal Beagles
BERR FOI Unfair Contract Terms - Law Commission - Legal Beagles
http://www.lawcom.gov.uk/docs/lc292bill.pdf

It would have put small business under the UTCCR umbrella just prior to the test case. Obviously things have changed since the SCoJ.


22 January 2010

Dear Law Commission,

I would like to request information and copies of documentation
relating to all discussions between BERR (now the Department for
Business, Innovation and Skills) and the Law Commission/Scottish
Law Commission with regards to the Unfair Contracts Bill, and the
Law Commissions' Report on Unfair Terms in Contracts (published 24
February 2005) for the period since July 2006, to include, but not
be restricted to, memorandum, letters, emails, minutes of meetings,
and any information relating to any regulatory impact assessment.

Yours faithfully,


Me




The response is on the site and the documents are

Sharpe, James
Law Commission

8 February 2010


BERR memo on max harm Dec08 updated.doc
46K Download View as HTML


notes on RIA.doc
44K Download View as HTML

Emails between T Gorely and G Horsington between 9 December 10 December 2008.htm.html
7K Download
Emails between T Goriely and R Newton R Crawford July 07 to August 07.htm.html
10K Download
Emails between T Goriely and Rose Newton BERR Rob Crawford MoJ dated 18 September 2006.htm.html
3K Download

The FOS

1. Section 228(2) of the Financial Services and Markets Act 2000 provides that “a complaint is to be determined by reference to what is, in the opinion of the ombudsman, fair and reasonable in all circumstances of the case”. This, in essence, gives the ombudsman a power to act outside the law. Ombudsmen need not apply rules or regulations directly, even though they use them as part of the process of deciding what is fair and reasonable in each case.
2. The question is: when the FOS approaches a dispute about potentially unfair terms in financial services contracts, would a maximum harmonised regime mean that it is limited to the strict application of the Regulations? Alternatively, may ombudsmen continue to take a more broad brush non-legalistic approach to what is fair and reasonable in all the circumstances of the case? There a danger that the broader discretion set out in section 228 of FSMA could be considered invalid if it allows the ombudsmen to impose decisions on financial service providers which go beyond the Directive.
3. In 2006 the Law Commission carried out a survey of 50 ombudsman decisions concerned with the application of insurance policy terms. We were interested to see how the FOS approached these types of case. We found that the FOS frequently followed the “spirit” of the Unfair Terms in Consumer Contracts Regulations, but tended not to take a technical or legalistic approach to them. Thus, although the FOS frequently addressed issues of fairness and transparency, the Regulations themselves were quoted in only two out of the 50 cases.
4. There were some differences of approach between the FOS's broad-brush approach and the technicality of the Regulations. In particular, the FOS dealt differently with the matter of timing.
5. Currently, the FOS may hold that although a term is fair at the time of the contract, it has been applied in an unfair manner. An example was an insurance case about a stolen bicycle. A clause in the contract stated that theft would not be covered if a bike were not locked to a secure structure at the time. A bike, not so locked, was stolen, and the insurer refused to pay. However, the bike was stolen from a location where many other bikes, all securely locked, had also been stolen at the same time. As it appeared that the bike would have been stolen whether or not it was securely locked, there was no causal connection between the breach and the claim. The FOS held that the term had been applied unfairly. This is different from saying that the term was unfair at the time of contract - it would be reasonable for the insurer not to pay if the lack of a lock was causally connected to the theft.
6. The problem with the timing comes from Article 32(2) which states that “the unfairness of a contract term shall be assessed… at the time of the conclusion of the contract…”. This means that the ombudsman cannot take into account subsequent events (such as how the bicycle was stolen). The term is either fair (in which case it applies to all cases) or unfair (in which case it applies to none, irrespective of the

   1. circumstances). The ombudsman would find it difficult to say that a term which was fair at the time of the contract was applied in an unfair way in the particular circumstances of the case.
   2. The danger is that:

   
   

   1. 1. 1. 1. Ombudsmen may be required to be more technical or legalistic in the way they approach unfair terms.
            2. Insurers would find it easier to appeal their decisions, on the grounds that they go further than the Regulations.
            3. There could be a challenge to the legality of the “fair and reasonableness” jurisdiction set out in section 228 of FSMA, in so far as it allows the FOS to go further than the Directive in deciding whether a term in a contract for financial services should not be applied because it is unfair.
            
            
         
         
      
      

   
   

   1. 1. 1. The non-legalistic approach taken by the FOS is one of its great strengths. We think that it would be beneficial to seek a carve-out for financial services in the Directive, thus protecting a broad ombudsman approach in the fields of banking, insurance and pensions, where most of the significant disputes occur

   
   

I have gone back to BERR for the RIA if one was actually done.

[Amethyst]

Re: Unfair Contracts Bill

THIS is also very interesting with reference to the CONSUMER RIGHTS DIRECTIVE

FSA handbook

1. 1. 1. The FSA handbook contains several requirements about how product information is presented. For example, under ICOBS Rule 6.4.4, protection insurers must provide the consumer with a policy summary that complies with the terms of Annex 2. The Annex includes many details of presentations, including a requirement that a “keyfacts logo” is put in a prominent position at the top of the policy summary. This is a clear rule, and insurers may be fined for its breach.
      2. Article 31(4) of the Directive provides that “Member States shall refrain from imposing any presentational requirements as to the way contract terms are expressed or made available to the consumer”.
      3. In our view, FSA requirements such as Rule 6.4.4 fall squarely within the scope of this provision. We have considered suggestions that the Rule only covers pre-contractual information and not contractual terms themselves, but do not think that this distinction can be made. Article 31(2) of the Directive covers pre-contract information, stating that “contract terms shall be made available to the consumer in a manner which gives him a real opportunity of becoming acquainted with them before the conclusion of the contract, with due regard to the means of communication used”. Article 31(4) specifically prevents additional presentational requirements.
      4. If the UK Government wishes to preserve the FSA's ability to require keyfact documents, we think it will need either to remove Article 31(4) or secure a carve-out for financial services.

Council of Mortgage Lenders....

Article 31
12. Paragraph 4 of article 31 provides that member states shall refrain from imposing any
presentational requirements in the way contract terms are expressed or made available to the
consumer. This would seem to catch FSA prescribed forms in relation to the mortgage offer and thus
indirectly the Key Facts Illustration (KFI) (though the latter is in fact pre-contract information). Secured
lending falling within the CCA 1974 could be similarly affected.
13. Again, this provision cuts across UK regulatory requirements and potentially imposes costs on
lenders without obvious consumer benefit.